[News] Responses from the South to the World Economic Crisis

[Anti-Imperialist News]

Responses from the South to the World Economic Crisis

http://www.venezuelanalysis.com/analysis/3879

October 16th 2008, by Various Authors
The International Conference on Political Economy: Responses from the 
South to the World Economic Crisis took place in Caracas, Venezuela 
from October 8-11, 2008, and was attended by academics and 
researchers from Argentina, Australia, Belgium, Canada, Chile, China, 
South Korea, Cuba, Ecuador, Spain, the United States, the 
Philippines, France, England, Mexico, Peru, Uruguay, and Venezuela.

The conference promoted a broad debate about the current economic and 
financial situation of the world, and about the new perspectives and 
challenges of the governments of southern peoples in the face of the 
international crisis.

The situation has worsened in the last few weeks. After repeated 
crises in the financial markets of a few central countries, it has 
quickly converted into an international crisis of enormous 
proportions. This places the countries of the South in a compromised position.

The crisis threatens the real economy. If energetic, effective, and 
immediate actions are not taken, it could bring overwhelming 
punishments upon the people of the world, particularly the sectors 
that are already the most vulnerable and left behind.

Today, the vulnerability of currencies, financial imbalances, and 
grave recessions reveal the neo-liberal myth about the benefits of 
market deregulation and the solidity and trustworthiness of the 
existing financial institutions, and they seriously put into question 
the foundation of the capitalist system.

The contributions presented during this conference have put into 
perspective the process of the crisis as it unraveled since August 
2007, and the failure of the concessions, bailout packages, and 
bribes by way of state intervention in developed capitalist 
countries, measures which aim to save the remnants of an already 
dislocated world financial system.

We denounce the pretension to take on our shoulders the cost of 
financial bailout packages on the collective world system, which 
would worsen the situation of poverty, unemployment, and exploitation 
of workers and the people of the world.

Neither the gigantic state intervention that we have observed in the 
last few weeks to save disarticulated entities emptied by 
speculation, nor the massive increase in the public debt are 
plausible alternatives to solve the crisis. The current dynamic 
encourages a new round of concentration of capital, and if firm 
opposition from the people does not exist, the perverse restructuring 
which saves only the privileged sectors will be emphasized even more.

That could also bring the return of the dangerous authoritarian 
tendencies in the functioning of capitalism, a regressive sign of 
which is already apparent in the increase in discrimination and 
racism toward the immigrant population from southern countries in 
countries of the North.

If we maintain the current policies for restructuring the capitalist 
system, there will be enormous productive and social costs that could 
threaten environmental sustainability even more.

The need to re-construct the international economic and financial 
architecture is unavoidable today. With this perspective, the need 
for a post-capitalist outlet is evident, and Venezuela has named it 
Socialism of the Twenty-First Century.

In a critical moment such as this, national and regional policies 
should give priority to social spending and protect natural and 
productive resources. Governments should introduce urgent financial 
regulation measures to protect savings, stimulate production, and 
place immediate controls on currency exchange and the movement of capital.

Considering this, it will be crucial to develop regional 
complementation and balanced commercial integration, improving our 
industrial, agricultural, energy, and infrastructure capacity. 
Initiatives such as [the Bolivarian Alternative for the Americas] 
ALBA and the Bank of the South should expand their radius of action 
and consolidate their perspective.

We should move toward an alternative integration that includes a 
common currency, a new world financial architecture that makes viable 
the insertion of the South in the international division of labor.

In this context, we must give importance to proposals for a social 
economy that promote dignified work and local initiatives to deal 
with the impact of the crisis.

On a global scale, we must continue our demands for a profound reform 
of the international monetary system, which implies the defense of 
savings and the channeling of investments toward the prioritized 
needs of the people. It should break from the system that mainly 
benefits from speculation, deepens economic disparities, and punishes 
the most vulnerable people.

In this way, we must create new foundations for new economic 
institutions that have the authority to act against the anarchy of 
speculation. State interventions that challenge the fundamentals of 
the market and protect the finances of the affected people are indispensable.

The crisis has awakened the common interests of people from all 
nations. Building upon this analysis, the International Conference on 
Political Economy: Responses from the South to the World Economic 
Crisis has arrived at the following conclusions:

Conclusions and Recommendations

We start with the following characterization of the international 
economic situation:

We find ourselves in an unprecedented situation on a worldwide level. 
The economic and financial crisis has worsened and accelerated 
enormously in recent days. Its future development, in addition to 
being difficult to predict, can take dramatic turns day by day.

The crisis had its initial epicenter in the United States and the 
stock markets, but now it is a worldwide crisis that affects the 
entire financial system and increasingly contaminates the productive 
apparatus. The crisis is having a special impact on Eastern and Western Europe.

Despite the initial expectation that Latin America was armor-plated 
and would be able to remain outside the crisis, there are now 
decisive indications of the certainty of coming impacts. Not only can 
we expect the prolonged deterioration of international commerce, but 
also a very violent financial shock in the short term. The more 
internationalized the banking system, the greater the fragility.

When we make these suggestions, we are conscious of the fact that 
there are always winners and losers in crises. Our intention is to 
institute measures that guarantee the well-being and the rights of 
our peoples and of the collective of citizens, and not to come to the 
aid of the bankers who are responsible for the crisis, as is 
occurring in Europe and in the United States.

Within this new scenario, we consider the following recommendations 
to be necessary, and they should be implemented urgently by the 
highest levels of political power.

With this purpose, we should consider an extraordinary summit of all 
the presidents of Latin America and the Caribbean, or at least of 
[the Union of South American Nations] UNASUR, which is presided over 
by a broad popular movement of our peoples.

The Banking System

Facing the collapse of the international financial system, 
governments in the region should immediately take custody of the 
banking systems by way of control, intervention, or nationalization 
without indemnity, following the principle of the new constitution of 
Ecuador that prohibits the nationalization of private debt (Article 
290 says: "the nationalization of private debt is prohibited").

The function of these measures is to prevent capital flight to the 
exterior, a run on the currency, the transfer of bank assets to 
foreign banks, and the freezing of credit by banks that do not lend 
the funds they receive.

Offshore branches of the banking system in each country must be shut 
down. They constitute a dangerous shield against fiscal regulation in 
these circumstances, in which limited liquidity will provoke a 
siphoning effect from the periphery.

Bank accounting should be opened to the public in order to strengthen 
the supervision of banks and the mechanisms of strict regulation that 
make the real situation of the national banking systems more 
transparent. These systems should have the character of a public 
service, as depositories of the savings of the population.

These measures should guarantee a minimum national investment of the 
liquid assets of the system.

We should encourage the promotion of non-profit investments in local 
development in the territory where the banking entity is located, 
administered by the local populations.

In the case of intervention, the state should recuperate the cost of 
the bailout with the assets of the banks, and the state should have 
the right to regulate the assets of the stockholders and the administrators.

New Financial Architecture

The absence of coordinated monetary policies produces a war of 
"competitive devaluation" that worsens the crisis and unleashes 
rivalries among our economies, impeding a coordinated response of the 
region. It structurally threatens integration initiatives such as UNASUR.

Because of this, we should give a clear signal of a Latin American 
monetary accord that immediately opens additional possibilities for 
reinforcing our macro-economies.

By defining a system of compensation payments based on a basket of 
Latin American currencies, we would provide each country with 
additional means of liquidity that would permit us to divest from the 
logic of the dollar in crisis.

In the context of constructing institutions for the reinforcement of 
our economies, it is required that we increase the communication 
among central banks, overcoming neo-liberal dogmatism with a much 
more efficient and opportune management of our international reserves.

With regard to this, it is important to move forward on the proposal 
for a Common Fund of the South as an alternative to the 
[International Monetary Fund] IMF, with contingent funds available 
for fiscal emergencies.

Taking advantage of the surplus reserves of each country, brought 
about by the creation of new sources of loans, liquidity, and 
regional money circulation, and by the existence of the Common Fund 
of the South, we will be able to mobilize resources to immediately 
put into operation the Bank of the South, ensuring its democratic 
management and not reproducing the logic of the multilateral credit 
and finance organizations.

This bank should be the heart of the transformation of the existing 
network of Latin American investment banks, oriented toward the 
reconstruction of the productive apparatus based on fundamental human rights.

We understand all of this to be in line with the Quito Declaration of 
Ministers from May 3rd, 2008, which states: "The people gave their 
governments the mandate to equip the region with new instruments of 
integration and development that should be based on democracy, 
transparency, participation, and responsibility to their electors."

In order to be democratic, the Bank of the South must guarantee the 
principle of one country, one vote.

It is indispensable that currency exchange controls be ratified in 
the countries that have them and established in the countries that do 
not, with the purpose of protecting the reserves and impeding capital flight.

In the context of the suspension of credit lines that the 
international financial crisis has imposed, countries in the region 
are forced to consider the suspension of payments of the public debt. 
This measure is aimed at temporarily protecting sovereign resources 
threatened by the crisis and avoiding the emptying of countries' treasuries.

Latin America and the Caribbean should learn from what is occurring 
in Europe, where each country is trying to solve the crisis on its 
own. This requires that we empower the mechanisms of alternative 
integration and development in the region.

Social Emergency

We propose the creation of a Regional Fund for Social Emergencies to 
immediately assure food and energy sovereignty, and also to attend to 
the severe problem of migrations and cutbacks in remittances. This 
fund could function as part of the Bank of the South or the Bank of ALBA.

Following the principle of not aiding the bankers who are responsible 
for the crisis, and instead aiding our peoples, social spending 
should be maintained and anticipated in public budgets, and 
incremented amidst the imminent effects of the international crisis 
on our peoples. The priorities should be: Job security, universal 
income, public health and education, and housing.

We must establish anti-inflationary mechanisms, including price 
controls, which preserve, increase, and redistribute incomes and wealth.

International Financial Institutions

The international financial crisis has brought proof of the 
complicity of the IMF, World Bank, and Inter-American Development 
Bank with the transnational bankers that have provoked the current 
collapse and its terrible social consequences.

That these organisms have been discredited is evident. This is an 
opportunity for the countries in the region to follow the example of 
Bolivia by pulling out of the [International Council of Investment 
Arbitration] CIADI, and follow the example of Venezuela by pulling 
out of the IMF and World Bank, and begin to help construct a new 
international financial architecture.

We summon ourselves to the Second International Conference on 
Political Economy: Responses from the South to the World Economic 
Crisis, to take place in Caracas in the first quarter of the year 2009.

Caracas, October 11, 2008.

Translated by James Suggett




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